The proposed expansion is being undertaken by the company on land within its existing facilities and no additional land is proposed to be/has been acquired by the company for the project. Therefore, PS5 (Land Acquisition and Involuntary Resettlement is not applicable. Similarly, no indigenous people or cultural heritage will be impacted by the project, therefore PS7 (Indigenous Peoples) and PS8 (Cultural Heritage) are not applicable.

This is a Category B project according to IFC’s Policy on Environmental and Social Sustainability because a limited number of specific environmental and social (E&S) impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. 

Environmental & Social Impact Assessment (ESIA): The company had completed an EIA for the distillery when it was being installed at Hariawan facility and has similarly completed an EIA for the sugar capacity expansion including the new CPP as per the requirements of 2006 EIA Notification. An EIA has been completed for the proposed distillery at Ajbapur facility and an environmental clearance has been obtained. Further, the company obtains the required “Consent to Establish and Operate” for the project (proposed sugar capacity expansion and installation of CPP at Hariawan facility) from the state pollution control board and will obtain the same for proposed distillery at Ajbapur. Also, the other required E&S permits including fire no-objection certificate, hazardous waste authorization, factories license and groundwater abstraction permission have been obtained by the company. Regular compliance reports are submitted by the company to the relevant authorities as required under these permits.

E&S Policy, Identification of Risks and Impacts, Management Systems: The company has an EHS policy, which is applicable for all its businesses and is publicly disclosed on its website (https://www.dcmshriram.com/sites/default/files/Occupier%27sEHSPolicy.pdf ). Both Hariawan and Ajbapur facilities have developed and implemented an integrated management system covering quality, environment and occupational, health and safety and obtained ISO 9001, ISO 14001 and OHSAS 18001 certifications. As part of the implementation of the integrated management system (IMS), a risk assessment has been completed covering all operations. Also, key procedures like permit-to-work (PTW) procedure, use of basic personal protective equipment (PPE), regular EHS monitoring, accident/incident/near-miss recording, management reviews etc. were noted to be implemented in line with PS1 requirements.

Additionally, the Hariawan facility has completed a Hazard Operability (HAZOP) study, fire safety audit and safety audit for its distillery operations through external consultants. The HAZOP is also being validated through another study. As per the ESAP (action 1), the company will share with IFC an action plan covering pending findings from these studies and timelines for their completion. These actions will be implemented within the agreed timeline. The company is also in the process of conducting fire safety audits for its sugar manufacturing facilities.

Organizational Capacity and Competency: The EHS Director is responsible for EHS management for all DCM businesses. Both the facilities have an EHS manager, who reports to the facility head as well as the Director - EHS.  The EHS manager is supported by section heads of environment and safety as well as employees operating the key pollution control facilities like effluent treatment plant (ETP) and electro-static precipitators (ESPs). Additionally, the facilities have a dedicated fire safety team. All staff responsible for EHS have the appropriate expertise and training to effectively perform their job. The head of quality for the facilities is typically the management representative for the IMS.

Emergency preparedness and response: Fire safety systems in the facilities for sugar manufacturing are mainly based on fire extinguishers and fire hydrants with dedicated fire water storage and pumping systems. As the distillery operation is new and has more fire safety risks, at Hariawan facility, it additionally has wet risers for the production floors, sprinkling systems for alcohol storage tanks and water and foam monitors. Similar fire safety systems will be provided at the proposed distillery at Ajbapur. During the visit, fire fighting systems were noted to be inspected and maintained. As mentioned above, a fire safety audit has been completed for the distillery operations at Hariawan facility and the recommendations are being implemented.

An emergency response plan is documented at the facilities which describes the plan and responsibilities in case of any emergency. Fire and evacuation drills are conducted at the facilities on a regular basis. However, implementation of the emergency response systems needs improvements as for example: (a) no emergency lights have been provided on the production floor to identify evacuation routes; (b) emergency evacuation routes and exits have not been marked; (c) the evacuation time (as noticed in the drills) is long and the root causes need to be identified for the same and ensure that evacuation time is reduced; (d) emergency response plan does not clearly highlight the roles and responsibilities for key people and also does not have any back-ups for such people. As per the ESAP (action 2), DCM should review these findings and agree with IFC on a corrective action plan with reasonable timelines. The plan should be implemented within the agreed timelines for both facilities.

Monitoring and review: The facilities conduct regular EHS monitoring including ambient air quality, effluent quality, groundwater quality, ambient noise, work area air quality, work area noise and stack emissions monitoring. Also, as per the requirements of the state pollution control board (SPCB), the stacks of CPPs and outlet of ETPs have online sensors (for certain emission parameters) and flow meters, respectively, the data from which is automatically uploaded to the servers of the SPCB.

All incidents/accidents/near-misses are recorded and investigated. Also, as per review of available documentation, regular internal audits are conducted by the internal audit team. EHS performance and implementation of the IMS is discussed in the management review meeting, and any gaps are addressed accordingly.

All facilities (including Hariawan and Ajbapur facilities) submit a monthly performance report to the Director – EHS which includes highlights, compliance status with all permits, monthly safety performance with details of the incidents, production data and online testing data for air and effluent quality. At the corporate level, DCM has created an EHS forum – EHS Awareness and Sustainability (“EHSAAS”) with a steering committee which includes all the EHS managers of its facilities (from all SBUs). There is a quarterly meeting of the platform to discuss EHS performance, new developments, good practices etc. Also, the EHS Director regularly visits all facilities and conducts audits/inspections to identify areas of improvements.

The Hariawan facility employs 286 permanent employees (110 management staff and remaining 176 are workers) and 195 seasonal workers (who work in cane crushing season and are paid a retainer in the off-season). Additionally, the facility hires contract workers (about 475) who are involved in cane collection, security and housekeeping and has piece-rate contract with contractors for sugar packing (about 40 workers). Similarly, the Ajbapur facility employs 420 permanent employees (130 management staff and 290 workers), 350 contract workers and packers.  

Human Resource (HR) Policy, Working Conditions and Terms of Employment: DCM has a corporate HR policy manual specifically for its sugar SBU. The manual includes specific policies and procedures on operational matters such as manpower planning, recruitment, selection, new employee induction, employee welfare and benefits (salary and other benefits), performance management, training and development, leave, employee separation, etc. The policies are regularly reviewed by the SBU HR and implemented through the facility level HR. Additionally, the sugar facilities follow the state-specific requirements like the model standing orders and sugar sector specific regulations.

All the permanent and seasonal workers sign a contract with the company with the terms of employment which are aligned with the national requirements and PS2. The policies are explained in the induction and HR portal. Though there is no one-on-one induction for the workers, there are some common sessions. The permanent and seasonal workers have legal benefits of provident fund, gratuity and bonus and are covered in the personal accident policies of the company. The attendance is tracked through a punching system and the salary is paid through bank transfer. For seasonal workers, off-season retainer is paid based on the applicable legal requirements of the state for the sector.

Non-discrimination: The company has included equal and fair treatment in its operating principles and guidelines, which are part of the HR policy manual. Also, having a workplace free of any form of harassment (physical/verbal/psychological/sexual) is also part of the operating principles.

Prevention of child and forced labor: To prevent use of child labor, the facility collects age proof documentation at the time of recruitment of the worker.  IFC’s review identified no instances of child labor or forced or bonded labor. 

Freedom of association and grievance mechanism: DCM does not restrict freedom of association of its employees. However, currently, the facilities do not have a union.

As per discussions during the visit, currently there is no documented grievance mechanism. As per the ESAP (action 5), the company should develop a grievance mechanism in line with PS2 requirements, including managing complaints related to sexual harassment and create awareness about it among the workers. The mechanism shall allow filing of grievances anonymously and without any retribution.

Occupational, health and safety (OHS) management: As discussed above, the facilities have developed and implemented an OHS management system certified as per OHSAS 18001 requirements. Under the system, a risk assessment has been conducted for the operations. Also, key procedures like PTW system, use of basic personal protective equipment (PPE), regular OHS monitoring, accident/incident/near-miss recording, management reviews etc. are implemented.

The company has initiated implementation of a behavior-based safety (BBS) program (from January 2019) at Hariawan facility and is implementing it with support of an external consultant. All employees and workers take a safety oath daily in their department and on a facility level once a month. There are regular tool box talks. An annual training calendar is prepared, and safety training programs are conducted on a regular basis. The facilities have a safety committee with equal representation of workers and management which meets on a quarterly basis to discuss safety issues. As per available records from the facilities, in last three years, there have been two reportable accidents with lost time and 52 first-aid injuries at Hariawan facility and two reportable incidents and two first-aid injuries. This data covers workers under direct contract with the company. The lost-time frequency injury rate (LTIFR) for last three years for Ajbapur (0, 0.67 and 0.59) and Hariawan (0, 0.46, 0.19) are significantly low as compared to Incident Rates for 2017 for Sugar Manufacturing as per OSHA (i.e. 5.8 per 200,000 man-hours or 29 per million man-hours).

During the site visit, the workers were noted to be working with appropriate PPE. Except for few construction/contract worker related risks/hazards (described below), no unmitigated safety hazards were noted.

Workers Accommodation: On-site accommodation has been provided for the permanent staff and workers as well as seasonal workers (who stay during the cane crushing season only). The accommodation was noted to be of reasonable quality and provided with basic facilities.

Third Party Workers: The company has labor supply contracts for security, housekeeping and cane collection whereas the contract workers involved in sugar packing are through piece-rate contracts. The facility level HR ensures that contract workers are provided the wages and benefits in line with the applicable requirements through review of documents submitted with the invoices and also ensuring payment in their presence.  

During the site visit, the distillery construction was noted to be underway at Ajbapur facility. A number of contractors were noted to be working on the site. The company has included basic safety provisions in its contracts. All contractors have a safety officer on-site. Also, DCM has hired six safety officers from an external consultancy to monitor construction safety on-site in all three shifts, report unsafe acts/conditions to the facility EHS management and ensure that they are corrected. The construction workers were working with the required PPE.

Also, a number of construction and commissioning contractors were working on the site to finish the works on the expansion projects in Hariawan facility. It was noted that though the contractors had obtained a PTW and workers had been provided with the appropriate PPE, they were not using them (e.g. safety belts while working at height, eye protection for welding) and construction areas were not barricaded. The EHS manager of the facility will improve monitoring of PTW compliance. The Ajbapur facility will also implement similar additional measures and monitor PTW compliance.

Supply Chain: As a company, DCM works with around 160,000 farmers spread over approximately 2000 villages. Each sugar manufacturing facility has a catchment area from which it has been legally permitted to source cane. The Hariwawan facility has a cane area of about 46000 hectares whereas the Ajbapur facility has a catchment area of 55000 hectares. Typically, the facilities provide an estimation to the farmers on cane requirement a few days before and the farmers harvest and supply the cane as per given schedule to the facility or collection centers within the area. The company has engagement programs which include extension services to all farmers for cane and non-cane products and a variety of education, health, and women initiatives.

IFC has been involved in providing advisory support to the company since 2009 with a focus on improving productivity for the farmers. Initially, it was started as a pilot program around DCM’s Ajbapur facility covering 2000 farmers and was later expanded to cover all its facilities. As of 2018, under the program, capacity building and extension support has been provided to about 80,000 farmers on enhancing farm yields and good water management practices. Also, the program has covered aggregation of farm equipment which has resulted in rural entrepreneurship in mechanization services. Though initially it was a traditional IFC farmer-support program, it has been expanded to a market-driven initiative with institutional sugar buyers such as Hindustan Unilever Ltd., Coca Cola India and DCM Shriram stepping up investments in sustainable sugarcane.

The most recent program is focusing on the catchment areas of DCM’s Rupapur facility in design of climate smart package of agronomy practices to increase farm resilience to increase yields, farm water efficiency, farm energy efficiency and contribute to increase in sugar recovery. The program (a) provides training /capacity building and strengthened agri-extension services (through smart communication and technology solutions, through demonstrations, field trainings etc.) on climate smart package of practices with a target of covering 20,000 farmers (including female farmers); and (b) facilitates introduction and distribution of new technologies and business models such as solar irrigation pumps, micro-irrigation systems, and smallholder access to mechanization for cultivation via service providers.

Backed by water trials from the Indian Institute for Sugarcane Research, the company is estimated to have led to over 55 billion liters in water use avoidance in sugarcane farming and has recently won the Confederation of Indian Industry (CII) National Award for Excellence in Water Management for “Beyond the Fence” category.

In line with global expectations on sugar sourcing, the company is working to implement systems in order to achieve certification as per the requirements of BONSUCRO, which is a global multi-stakeholder non-profit organisation that is promoting sustainable sugarcane production, processing and trade around the world. The BONSUCRO standard covers similar requirements as IFC PS2 (PS3 and PS6) on supply chain i.e. compliance with legal requirements, prevention of human rights violation (e.g. forced and bonded labor, child labor), use of Pesticides, which are not in WHO Recommended Classification of Pesticides by Hazard Class Ia (extremely hazardous); or Ib (highly hazardous) and protection and management of biodiversity and eco-system services. The company has initiated the process with implementation at its Loni and Ajbapur facilities and has created cross-functional teams (with HR and cane sourcing) leading the implementation. The same systems will be rolled out and implemented at the Hariawan facility. As per US Department of Labor’s 2018 List of Goods Produced by Child Labor or Forced Labor, there is potential risk of child labor in India for sugarcane production, therefore as per the ESAP (action 3), the company will develop and implement key procedures for its Hariawan facility covering PS2 (PS3 and PS6) requirements on supply chain within the agreed timelines. These procedures can then be integrated into the system needed for BONSUCRO certification, as required.

Power Supply and Air quality: The main power source for the Hariawan facility (both for the sugar and distillery operations) are the CPPs. Bagasse is used for power generation in the CPP (~25 MW) for the sugar operations whereas concentrated slop/spent wash (along with ~30% bagasse) is used for power generation in the distillery (~6 MW). The new CPP has added another 30 MW to the power generation capacity.

Similarly, the main power source for Ajbapur facility is 55 MW bagasse-fired CPP (three turbines – 7.5 MW+20 MW +27.5 MW and three boilers – 2 nos. 60 tons per hour (tph) each and one of 135 tph). The total power requirement for operations at these two facilities is 36MW and remaining power is exported to the grid (~80 MW). Even from the new power plant in the Ajbapur distillery will produce 12 MW out of which, 4 MW will be exported to the grid. The CPPs have been provided with ESPs for controlling air emissions. The facilities also have diesel generator (DG) sets (750 KVA, 500 KVA and 1 nos. 1000 KVA) for back-up power at Hariawan and 2 nos. of 1000 KVA DG sets at Ajbapur. As the power is generated on-site, the DG sets are used on very few occasions.

As mentioned above, the company conducts regular ambient air quality and stack emissions monitoring. The results were noted to be meeting the national and state standards and WBG EHS guidelines except for the particulate matter (PM) emissions from the boilers at the two facilities (in the range of 110-130 mg/Nm3) which are not in compliance with the WBG EHS guideline of 50 mg/Nm3. As per the EIA report completed for the sugar expansion at Hariawan facility, based on ambient air quality monitoring at 10 sensitive receptors and modelling of the impact, the incremental impact on the baseline air quality was predicted to be negligible. As per the ESAP (action 4), the company will conduct environmental monitoring (during the next cane crushing season and winter season) at the nearby sensitive receptors and airshed of the Hariawan and Ajbapur facilities to validate the modelling results of the respective EIAs and ensure that the current emissions are not contributing significantly to the PM emissions in the air shed, in which case, the emissions up to 150 mg/Nm3 can be considered compliant with the guidelines. If not (based on the result of the assessment), DCM will submit and agreed on an improvement plan to meet the stack emissions guidelines of 50 mg/Nm3 of PM. 

Water Supply and Effluent management: The main source of water are the on-site borewells. Water abstracted from the borewells is treated to meet the quality requirement for various uses.

An ETP has been provided for the sugar manufacturing with a treatment capacity of 3000 m3/day (at Hariawan) and 2200m3/day at Ajbapur. The effluent is treated through a combination of anaerobic and aerobic treatment processes. The treated effluent is used for irrigation on land owned by the company and in press mud and ash composting areas (total land area of approximately 30 and 18 hectares at Hariawan and Ajbapur, respectively). Additionally, the facilities have agreement with farmers (in an area of about 3 to 4 km) to supply treated effluent for irrigation in their fields (approximately 85 and 196 hectares at Hariawan and Ajbapur, respectively). The effluent quality is regularly tested both internally and externally and results were noted to meet the national standards as well as WBG EHS guidelines.

For the distillery at Hariawan, a separate ETP has been provided with a capacity of 2136 m3/day where similarly, the effluent is treated through a combination of anaerobic and aerobic treatment processes. The effluent is further treated through a reverse osmosis (RO) process and is reused for cooling tower make-up. The spent wash generated from the analyser column is concentrated in multi-effect evaporation (MEE) along with the RO reject. As mentioned above, the resultant concentrated slop/spent wash is used as a fuel in the CPP to generate power and steam. Similar arrangement will be made for the proposed distillery at Ajbapur facility.

Currently biogas generated from the anaerobic process in the sugar ETP is being flared however, the company plans to explore to utilize it as fuel for the CPP from the proposed distillery at Ajbapur.  From the distillery ETP at Hariawan, the gas is being flared. At Ajbapur’s, similar system of flaring is being followed for sugar and will be proposed for the distillery.

Solid and Hazardous Waste: The main waste streams generated at the facilities are paper/plastic/metal waste, fly ash (from the ESPs), press mud (from sugar manufacturing), empty containers of chemicals/oils/paints, used oil, oil-soaked waste and ETP sludge. The facilities sell paper/plastic/metal waste to external agencies. Part of the press mud are composted on-site whereas bulk of the press mud is given to the farmers for use on their fields as manure. Fly ash is used on-site and given to farmers for land filling. Empty containers are washed and given back to the vendors. ETP sludge (after drying) is used on-site as manure for gardening. Ash from the distillery slop fired boiler is used for soil amelioration due to its rich potash content. ETP sludge is used as manure. Used oil and grease is sold to the authorised recyclers approved by CPCB.

Pesticide usage: The farmers involved in cane farming use both bio-pesticides and chemical pesticides. DCM is promoting use of bio –pesticides (which is developed in one its facilities) by its distribution and training. The farmers also use chemical pesticides. The company provides information on use of chemical pesticide by providing training through village meetings, mobile van theatre and pamphlets/posters etc. The requirement of ensuring use of pesticides, which are not in WHO Recommended Classification of Pesticides by Hazard Class Ia (extremely hazardous); or Ib (highly hazardous) will be included in the supply chain procedures described in PS2 above.

GHG emissions: As the Ethanol produced from the proposed distillery will be replacing gasoline for the vehicles, the distillery is expected to have a positive GHG footprint and lead to saving of 125,000 tons of tonnes of CO2 equivalent (tCO2). Also, as the power produced in the project (30 MW in the CPP in Hariawan + 12 MW in the proposed distillery at Ajbapur) will be based on bio-mass (bagasse and concentrated slop), it will lead to a further saving of about 95,000 tCO2.

The facilities have adequate space for parking of trucks/trolleys bringing cane for processing. As regards to security, the facilities employ armed security guards. No incidents with communities nor workers have been reported to date. To meet the requirements of PS4, as per the ESAP (action 6), the company will document a specific security policy/code of conduct which will include behaviour with the community, workers and implement clear guidelines on use of force as well as processes on background checks of the guards. The policy will be communicated to the security guards as part of the induction, as well as refresher training. In addition, the grievance mechanism will also allow for complaints related to security forces.

Cane crushed by the facility is sourced from the local catchment/command area which is allocated to the facility by the government. Based on the assessment done, the sourcing area is modified habitat already under farming activities.       

As discussed under PS2 above and set forth in the ESAP, the company will develop and implement key procedures for both the facilities covering IFC PS6 requirements on supply chain on prevention of conversion of natural habitat for plantation. These procedures can then be integrated into the system needed for BONSUCRO certification, as required.

As per the requirements of the Companies Act 2013, the company is required to spend 2% of its average past 3 years net profit (after tax) on corporate social responsibility (CSR) activity as defined under the CSR Rules, 2014. The company has accordingly set up a CSR Committee at the Board of Directors level and documented a CSR policy. In line with the CSR policy, the company is undertaking projects focussing on livelihood/vocational skills, healthcare and sanitation, environment and education. Details of CSR projects and expenditure are disclosed as part of the company’s annual report. Also, as mentioned above under PS2 (on Supply Chain), the company engages with a significant number of farmers through the extension services and IFC supported advisory project.     

As part of the process of obtaining the environmental clearance for the establishment of distillery, a public hearing was completed in the local area. As the sugar expansion was undertaken within two years of the distillery establishment and no additional land was acquired, no separate public hearing was completed. To receive and process any community grievances, as per ESAP (action 7), the company will develop and implement a documented community grievance mechanism meeting the IFC PS requirements.

DCM will locally disclose this ESRS-ESAP at the facility:
 

Ajbapur Facility

P.O. Mullapur

Distt. Lakhimpur Kheri – 261505

Uttar Pradesh, India.

Tel: +91 5875 243206

Hariawan Facility

Village & P.O. Hariawan

Tehsil & District Hardoi – 241405

Uttar Pradesh, India.

Tel: +91 5852 253181  

Any queries and/or comments about the project may be directed to:

Mr. Himanshu Bokaria

1st Floor, Kanchenjunga Building

18, Barakhamba Road

New Delhi – 110001.

+91 11 4210 0200